Rare earths are China’s bargaining chip in the trade war — the U.S. is trying to fix that

Rare earth elements, a collection of 17 specific elements on the periodic table, are known for their unique magnetic properties and play a crucial role in various modern technologies. These elements have become a pivotal factor in the ongoing trade dispute between the U.S. and China. From powering electric vehicles and wind turbines to enhancing defense systems and high-tech consumer electronics, rare earth magnets are essential for numerous industries. Historically, the United States led the world in rare earth production; however, over recent decades, it has become heavily reliant on China, which dominates the market by mining approximately 70% and processing around 90% of rare earths. Neha Mukherjee, a rare earths research manager at Benchmark Mineral Intelligence, emphasizes that China's long-standing monopoly in this sector has only strengthened, with production costs significantly lower than those for producers outside China. This economic advantage has created barriers for other nations to compete effectively. In recent months, rare earths have emerged as a strategic weapon in the escalating trade conflict. Following China's implementation of export controls on these materials in April, various industries, particularly the automotive sector, have faced significant disruptions. Dewardric McNeal, a managing director at Longview Global, notes that China has methodically developed its export control strategies, akin to those of the U.S., in response to perceived injustices. In a bid to break free from its dependence on Chinese rare earths, the U.S. is actively working to establish a domestic supply chain. In July, the Department of Defense revealed a $400 million investment in MP Materials, the only operational rare earth mine in the U.S., located in Mountain Pass, California. Additionally, financial support from major firms like Goldman Sachs and JPMorgan has bolstered MP Materials' expansion into magnet production. Other companies are also making strides in this sector. Energy Fuels has been refining rare earths at its Utah facility since five years ago, leveraging its experience in uranium mining to extract valuable elements from monazite. The company currently produces neodymium-praseodymium oxide, essential for permanent magnets, and has plans to expand its production capabilities to accommodate a broader range of rare earth materials. Despite these advancements, experts caution that the U.S. still has a long journey ahead to achieve true independence from Chinese rare earth supplies. As the situation evolves, the potential for significant changes in the global rare earth landscape remains a key area of interest.